Second District, Division Two Reverses Cost Denial Order and Reminds Us of the Two-Step Analytical Approach to be Employed Under CCP section 1032.
The next case is an excellent reminder of how Code of Civil Procedure section 1032 is to be construed in determining a “prevailing party” for purposes of an award of routine costs. There is a two-step analytical process that must be followed, in conjunction with applicable substantive law. First, the court determines the class of prevailing party that the costs claimant belongs to. Second, depending on the class of prevailing party that the costs claimant belongs to, the court exercises either mandatory or discretionary authority to award costs.
In DNS Contractors, Inc. v. California Portland Cement Co., Case No. B200301 (2d Dist., Div. 2 July 2, 2008) (unpublished), subcontractor cross-complained against several parties, including its cement supplier, in a dispute involving nonpayment and defective work allegations for concrete work at the sea lion exhibit at the Los Angeles Zoo. Eventually, subcontractor’s cross-complaint was dismissed as part of a good faith settlement determination under which various payments, credits, and assignments were made. Supplier filed a costs memorandum, requesting reimbursement of $22,345 in costs from subcontractor. Subcontractor moved to strike costs, which was granted over supplier’s objection that it was a prevailing party under Code of Civil Procedure section 1032(a)(4).
Supplier appealed and won a reversal, in a 3-0 decision authored by Justice Doi Todd.
Citing to Wakefield v. Bohlin, 145 Cal.App.4th 963, 975-977 (2006), the Second District, Division Two reminded everyone that there are two distinct groups of prevailing parties: (1) Group No. 1 is made up of four categories of litigants—(a) a party with a net monetary recovery; (b) a defendant in whose favor a dismissal is entered; (c) a defendant where neither plaintiff nor defendant obtains any relief; and (d) a defendant who defeats relief by plaintiffs; and (2) Group No. 2 consists of parties recovering other than monetary relief and in situations other than those identified in Group No. 1. Importantly, costs awards are mandatory for Group No. 1 and discretionary for Group No. 2.
The trial court error in DNS was determining supplier was in Group No. 2 rather than Group No. l. Because supplier was a cross-defendant in whose favor a dismissal was entered, it was a Group No. l litigant and entitled to costs as a matter of right. In this regard, the appellate panel found the situation was no different than those involved in Crib Retaining Walls, Inc. v. NBS/Lowry, Inc., 47 Cal.App.4th 886, 890 (1996) and Great Western Bank v. Converse Consultants, Inc., 58 Cal.App.4th 609, 614 (1997), where courts came to the same result. When one is a Group No. 1 member, the lower court lacks discretion to consider such factors as whether the litigant attained its litigation objectives—this type of consideration is only relevant to Group No. 2 litigants. See Great Western Bank, supra, 58 Cal.App.4th at 614-615.
DNS is a good refresher on the two-step approach that must be followed in determining entitlement to routine costs under section 1032.